Investors move into agriculture

A sustainable economy0

“Demand for agricultural commodities tends to be less elastic, less responsive to economic factors, more responsive to population,” said Lawrence Eagles, a commodities analyst at J.P. Morgan.

However, lower agriculture prices and scarce and expensive credit may cause farmers to struggle to finance production.

The recent drop in commodity prices has been a disincentive for farmers to reinvest in production.

The agricultural markets may yet fall further, before staging a recovery due to the demise of some of the world’s largest banks, which has caused a lack of confidence in capital markets.

Mr Eagles says there’s great potential for agricultural commodities to lead the way in a commodity market rebound.

“Prices are not going to be dictated by funds and fund flows next year,” he says.

“It’s going to be about the availability of trade finance and demand and supply.”

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